Tuesday, September 22, 2009

How Important Is PRICE?Most of us instinctively know that price is important. It’s important in every kind of market, but it gets more important as market activity slows.

In the current market, it’s almost impossible to exaggerate the importance of price from the prospective of buyers and sellers.

Buyers who successfully buy make offers that are at or near market price. Sellers who successfully sell price their properties at or near market price. Simple?

You’d think so. But there are so many would-be buyers out there who are trying to “steal” properties for way less than they’re worth (yes, even in this market). There are also a good many sellers who are still overpricing homes they’re futilely wishing they could sell (yes, even in this market).

There are also buyers who are getting good deals and sellers who are making reasonable sales. Their secret?

SUCCESS SECRET

Successful buyers and sellers make it a point to KNOW what market price is for the property they’re seeking to buy or sell. There are many ways to do this. Each involves work and/or money.

You can check with your agent or the public records for what SIMILAR homes nearby have actually SOLD for RECENTLY. Make adjustments for any obvious differences such as lot size, curb appeal, condition, etc.

You can pay an appraiser to do this for you. In my neck of the woods, one would expect to pay about $350 for an appraisal. It might be more or less in your area.

There are also home value report services on the internet. We have a link to one on our site. Some of them are very good, especially if you have enough knowledge to interpret them (ignore homes nearby that are included, but aren’t really comparable, for example). Some of these services are free. The better ones tend to charge for their reports.

There is also a service that’s probably available that buyers and sellers don’t typically use. What am I talking about?

Experienced real estate agents are very good at doing a “market analysis” and coming up with a market price using data available to them through their local, realtor multiple listing service. They typically provide this service without a separate charge to their listing and buying clients.

Bankers who don’t necessarily want to pay the full price to have an appraisal done will often offer to pay a real estate agent a smaller fee to do a market analysis on a property and provide an “opinion letter” as to the current market value of the property. Experienced agents are often very good at this, so the bank saves money, and the agent has an additional source of income.

I think buyers and sellers could probably make similar arrangements with real estate agents. The cost could be expected to be less than the cost of a full blown appraisal which is particularly important when one considers the fact that possible changes in value should be evaluated at least every six weeks under current market conditions.

If I were a buyer or seller approaching an agent, I’d tell them this frankly when I asked for their help. If I were a seller, I’d probably “sweeten the pot,” and incidentally broaden my marketing options by telling them I’d also be willing to pay them the listor’s typical commission (about half the going rate) if they brought me a buyer for my property.

No matter what approach one uses, successful buyers and sellers begin with and maintain a good knowledge about the market value of the property which is the subject of their interest.